PERTH (miningweekly.com) – Industry bodies the Queensland Resources Council (QRC), its exploration arm, the Queensland Exploration Council (QEC) and the Association of Mining and Exploration Companies (Amec) will not attend the Queensland government’s launch of the Queensland Resources Industry Development Plan (QRIDP), in protest at coal royalty hikes.
The QRIDP, which was developed with state and industry inputs, outlines six key focus areas where government and industry needed to take action in the short- to medium-term, including improving regulatory efficiencies, fostering strong and genuine First Nation partnerships, growing and diversifying the industry to take advantage of the growing demand for new economy minerals, strengthening environmental and social governance credentials, and building a resilient workforce.
QRC CEO Ian Macfarlane said the state government’s decision to impose the world’s highest coal royalty taxes on the sector in the state budget had undermined everything the QRIDP had been set up to achieve.
“The QRC has worked in good faith with the Queensland government on developing the QRIDP since it was first announced by Treasurer Cameron Dick during the 2020 election campaign,” he said.
“We took the Treasurer at his word that the state government was committed to removing barriers to growth for the resources sector, just as we took him at his word there would be no new or increased taxes in this term of government.
“We have to look at what the government does, not just what it says.
“The government has hit the resources sector with a massive tax hike that risks jobs and threatens investment in all Queensland commodities, not just coal.
“A glossy document doesn’t change that one bit.
“The QRC and our members have consulted extensively on the QRIDP for the past two years because we wanted to see a strong resources sector and strong regional communities.
“The government’s decision to introduce exorbitant new taxes – done behind closed doors and without consultation - has severely undermined any opportunities to achieve this outcome,” said Macfarlane.
The new coal royalties, which became effective on July 1, would see a royalty rate of 20% for coal prices trading above A$175/t, while coal trading at prices above A$225/t would be subject to a 30% royalty. A 40% royalty would be placed on coal tonnages trading above A$300/t.
Amec CEO Warren Pearce said that the decision to hit the coal industry with a massive royalty hike had seriously undermined any potential benefits of this plan, weakened industry’s trust in government, and was not something that should be celebrated.
“Queensland’s coal royalties have not only delivered record-breaking royalties exceeding A$6-billion this year, the highest amount of royalties ever paid to a Queensland government, but have been the backbone of Queensland’s post-Covid economic recovery.”
“Royalty rates of 30% and 40% will certainly deter international investors from making major new investments in Queensland, in any new resource project, making it harder for all Queensland resources companies to secure investment to build new projects.
“This is the third such unanticipated royalty increase in the last 15 years, and definitely not the stable investment environment that investors are looking for. This decision was without consultation and ill-considered, and the government is tarnishing investment opportunities for all other projects in the state.
“The coal industry does not exist in a vacuum, and what impacts the coal industry will impact investment in other areas.
“The Queensland government must reverse this decision and re-engage with industry on a way forward,” said Pearce.
The Minerals Council of Australia (MCA) has previously said that the state government’s royalty increase was a short-sighted grab that would stifle future investment in the state.
“It is an extraordinary decision at a time when mining royalties for Queensland have nearly tripled, from A$3.3-billion forecasted in last year’s budget to A$9-billion. Mining is the reason the Queensland budget recorded a surplus in 2021/22 worth A$1.9-billion, a significant turn-around from the forecast in last year’s budget which expected a A$3.5-billion deficit,” said MCA CEO Tania Constable.
“Data from the Australian Bureau of Statistics shows the coal industry paid A$58-billion in wages over the last 10 years. Coupled with state royalty payments worth A$42-billion, the industry has paid over A$ 100 billion to the people of Australia in a decade, nearly 20% more than its operating profits before tax in the same period.
“This unprecedented 40% royalty on revenue together with Australia’s 30% tax on profit makes Queensland the highest taxing mining jurisdiction in the world.
“Quite simply, it’s a breathtaking cash grab that may have serious future consequences for the industry, those employed in it and the businesses and communities that support it,” Constable said.
With the royalty taking effect at the end of last week, Dick said that the royalty arrangements would ensure that coal producers were funding more regional hospitals while still generating record profits and maintaining historically high share prices.
“With spot prices for metallurgical coal trading at around double the long-term average, coal producers today will be making record profits,” the Treasurer said.
“But from [Friday], the people of Queensland also start getting their fair share of those profits.
“[Friday] alone, an estimated A$2.1-million in extra royalties have been generated as a down payment on new and expanded regional hospitals.”
The Treasurer said that the share market performance of Australian-listed coal companies shows that international investors also recognise that progressive coal royalties with bipartisan political support are good for business.
“While the rest of the share market is down some 15% from six months ago, coal companies are well and truly up,” he said.
“This includes companies like Stanmore Resources (up 91%) and Bowen Coking Coal (up 32%), who operate wholly within Queensland’s new bipartisan royalty framework.
“If bipartisan progressive coal royalties were bad for those companies, why have their share prices outperformed the market?”
“Queensland coal mines remain good assets that will generate good returns into the long term, with profits protected by bipartisan progressive coal royalties that rise and fall with market pricing.”
The Treasurer said that, like all Queensland political parties, international investors recognise the progressive coal royalty regime represented good value for a premium Queensland product.
“Importantly, if prices go down, Queensland coal royalties will be lower than what New South Wales charges for its lower quality thermal coal,” he added.